Austerity and Rapid Deficit Reduction Is Failing in Its Own Terms

It is a great honour to succeed Brendan Barber as TUC General Secretary at this vital time for the trade union movement.

The dominant economic approach of the last 30 years is now on its last legs. Letting the market rip and an indifference to inequality are now seen as important causes of the greatest economic crash since the 1930s.

That neo-liberal consensus saw unions as a problem. Distorting markets in favour of the rich and powerful, as seen in the Libor scandal, was fine, but workers coming together to bargain collectively with employers was an offence against the natural order.

In the US the powerful critics of austerity such as Paul Krugman and Robert Reich rightly identify the decline of 'labor' as a problem, and renewing trade unionism part of the solution.

Our opportunity is to make the same case in the UK. British workers are now suffering the biggest decline in their living standards in generations. There has been a huge growth in vulnerable and insecure employment. Joblessness is not as high as many of us feared, but the number of workers in involuntary part-time employment, casual work or precarious self-employment is at record levels.

Even before the crash the economy had stopped working for many ordinary people, with wages for the many scraping along the bottom. The soar-away super-rich may have driven up the average, but this was cascade-up economics, not the trickle-down we were promised. Semi-permanent austerity threatens even higher levels of inequality, social exclusion and poverty.

Unions now therefore face a dual challenge. We first need to build the strength and unity that can make a difference not just to our members but to all of those at work who lack a voice. That means effectively challenging government policies, particularly those that strain the coalition.

Already some of Adrian Beecroft's wackier ideas to strip away hard-won employee rights seem to have been beaten back. The biggest strike in a generation last November secured pension concessions. Each day more coalition MPs in seats outside the South East come out against George Osborne's regional pay cut plans, and Vince Cable now claims they are dead. Our demonstration on 20 October will bring hundreds of thousands on to London streets once again to show the depth of opposition.

But there is also an intellectual challenge facing all those who want to see a fairer and more prosperous economy that can generate the jobs and incomes we need. We know many of the elements. There needs to be an active industrial policy once again that can rebalance the economy away from finance. The tax system must be made fair - and effective so that it collects the tax that too many avoid or evade. Meeting the imperative of decarbonising the economy gives us the opportunity to secure many quality green jobs. Banking needs a radical shake-up to ensure it serves the needs of the rest of the economy, rather than the interests of finance.

Yet we have yet to put this all together into the kind of simple yet compelling alternative that can enthuse and secure the centre ground - and bring together an alliance not just of trade unionists and our normal allies but good employers too. The TUC's new slogan "a future that works" sets a profound challenge. Austerity and rapid deficit reduction is failing in its own terms, but even at its best it is short-sighted, muddle-through politics with no vision of a new economic model.

No one group or party will have all the answers to that challenge. But I am determined that the TUC plays a full part, not just in the day to day defence of jobs, services and living standards, but in developing a vision of where the economy goes next.